U.S. climate bill, U.N. pact seen more likely in 2010

The U.S. energy bill may not pass until next year, which could also delay an agreement to extend the Kyoto Protocol on cutting global greenhouse gas emissions until 2010, experts said on Thursday.

Environmentalists, carbon market developers and many politicians have urged passage of a U.S. climate bill before December, when nearly 200 countries will aim to hash out a successor to the Kyoto pact.

They have seen it as a way for the United States, the world's largest greenhouse gas polluter on a per capita basis, to break a deadlock with China, the top overall greenhouse polluter, on taking action on global warming. Combined, the giants emit about 40 percent of the world's planet-warming pollution.

The U.S. bill, which would launch a cap-and-trade market to reduce emissions, has made progress, including passage in the U.S. House of Representatives Energy and Commerce Committee. It also has the support of President Barack Obama, but much work remains to be done.

Action in the Senate will be far more difficult than in the House, Eileen Claussen, president of the Washington-based nonprofit the Pew Center on Global Climate Change, told an Environmental Finance conference on Thursday. She said it's nowhere near certain that the bill would come to a Senate vote this year.

Two obstacles stand in the way. First, advocates must convince the public the bill, which might initially raise electricity and other energy prices, will ultimately save money by heading off damage caused by global warming.

One opponent, the Coalition for Affordable American Energy, whose members include the influential U.S. Chamber of Commerce and about 200 other organizations, has estimated climate legislation could cost U.S. households $1,400 per year by 2020.

Claussen said the current U.S. climate bill contains consumer protections that would shield against such price shocks.

Second, experts said the bill must include nuclear energy, which is nearly emissions free but comes with other problems such as toxic waste. Claussen said a resolution on nuclear power could help the Senate reach the required 60 votes for the bill's passage.

Overcoming the hurdles and passing the bill, especially during a recession, will take time, probably until next year, for lawmakers to work out.

There is an old saying in politics, said Steve Corneli, a market and climate policy expert for U.S. power generator NRG Energy, Inc. When you are explaining, you are losing.

Without action from the United States, rich and poor countries will remain divided on the climate change issue. The focus in Copenhagen in December might shift from forming a final global agreement to working out a framework of ideas, such as how to bury carbon emissions and finance renewable energy infrastructure. Advocates are encouraged, though, that China and the United States are making enough progress that a global pact should eventually be hashed out.

I don't think not reaching an agreement (in 2009) will be particularly dire, one carbon market broker said.